LA QUINTA, Calif. — Demand for used vehicles could grow as much as 5 percent in 2018, a panel of economists said recently, as sales of new cars are expected to decline.
The used-vehicle industry can expect a strong general economic climate but will face continued challenges of shrinking margins, lower vehicle prices, disruptive technologies and political and regulatory uncertainty, the panelists at the recent Used Car Week conference/National Auto Auction Association convention in La Quinta.
The added volume of used vehicles should help franchised dealers offset lower new-vehicle sales, but independent dealers face greater competition for inventory, the economists said.
More used vehicles re-entering the marketplace will depress prices further in 2018, said Tom Kontos, chief economist at KAR Auction Services, who predicted used volume will rise as much as 5 percent in 2018.
"If not 5 percent, then 2 to 4 percent," he said. Used-vehicle prices have fallen 2 to 3 percent this year and are likely to decline a similar amount in 2018 because of rising volume, he said, largely the result of more off-lease vehicles.
Ira Silver, NAAA chief economist, forecast 2- to 3-percent higher used-vehicle volume next year.
Jonathan Smoke, Cox Automotive's chief economist, noted that the 2018 used-vehicle sales gains would be driven by increased supply, mostly because of 300,000 more off-lease returns. He predicted auto auctions would have flat volume in terms of retired fleet vehicles and units wholesaled by dealers, plus only a small increase in repossessions.